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$A higher ahead of US jobs figures

Jason Cadden

The Australian dollar is slightly higher but is trading in a tight range ahead the release of key US employment data.

At 1700 AEST on Thursday, the local unit was trading at 92.95 US cents, up from 92.81 cents on Wednesday.

During the local session, it traded between 92.79 US cents and 93.07 cents.

On Friday the US Labor Department will release non-farm payrolls for April, the key indicator of US employment growth.

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Investors will be looking for signs that the economy has recovered from the bad winter weather which weighed on US economic growth in the first three months of the year.

The market is expecting over 210,000 jobs to be added to the US economy in April, the strongest monthly expectation for employment growth in seven years.

ThinkForex senior markets analyst Matt Simpson said a strong figure will weaken the Australian dollar, because it will increase the likelihood that the US central bank will continue to wind back its economic stimulus program.

"The Australian dollar is in a waiting game with tomorrow's US non-farm payroll and jobs data," he said.

"If the forecasts prove correct we should see the dollar drift toward 92.50 US cents support, and maybe even 92.00 cents on substantially good US jobs data.

"If we see a howler of a result from the US employment the Aussie could end up testing 93.20 US cents, with a break above here putting it back on track to target 94.50 cents."

On Thursday night, US Federal Reserve chair Janet Yellen will give a speech in Washington, which will also be of interest to financial markets.

At 1700 AEST, the Australian dollar was at 95.01 Japanese yen, down from Wednesday's close of 95.06 yen, and at 66.94 euro cents, down from 67.20 euro cents.

Meanwhile, Australian bond futures prices are higher after a report showed the US economy barely grew in the first three months of 2014 as winter storms lashed parts of the country.

Gross Domestic Product grew at an annual rate of 0.1 per cent, the slowest growth since the last quarter in 2012.

FIIG Securities director - fixed income sales Simon Michell said US Treasury bond prices rose (yields fell) on the back of the data and Australian bonds followed.

"The US GDP came out much lower than expected," he said.

"So yields fell, but we saw a bit of a rally in equities."

At 1630 AEST on Thursday, the June 2014 10-year bond futures contract was trading at 96.070 (implying a yield of 3.930 per cent), up from 96.055 (3.945 per cent) on Wednesday.

The June 2014 three-year bond futures contract was at 97.070 (2.930 per cent), up from 97.050 (2.950 per cent).